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Bank chief calls for EU vote 'soon'

Published 14/05/2015

Bank governor Mark Carney spoke of business uncertainty around the referendum
Bank governor Mark Carney spoke of business uncertainty around the referendum

An in-out referendum on the UK's membership of the European Union should take place "as soon as necessary", according to the Bank of England governor.

Mark Carney said businesses are continuing to invest and hire despite political uncertainty connected to either the recent election or future referendum.

He said he is sure the Government will act with "appropriate speed" in negotiations over the UK's membership and put forward an appropriate question.

The Conservatives have pledged to have a vote on the issue before the end of 2017.

Asked if the referendum had resulted in uncertainty among business bosses, Mr Carney told BBC Radio 4's Today programme: "We talk to a lot of bosses and there has been an awareness of some of this political uncertainty - whether because of the election or because of the referendum.

"What they've been telling us, and we see it in the statistics, is they have not yet acted on that uncertainty - or to put it another way, they are continuing to invest, they are continuing to hire."

Asked why productivity has not therefore increased, Mr Carney said: "It should start to move up.

"One of the big advantages this economy has is access to the European market. It's the largest economy in the world, it's our largest per destination, it's our largest investor in the United Kingdom."

Pressed on whether he would like to see the uncertainty end as soon as possible, Mr Carney replied: "I think it's in the interests of everybody that there is clarity about the process and the question and the decision."

Mr Carney said he would not put a specific timetable on the issue, noting: "The Government has made it clear it's a priority. I'm sure the Government will act with appropriate speed in developing the negotiations and putting forward an appropriate question."

Asked if he meant he would like to see the referendum sooner rather than later, Mr Carney said: "As soon as necessary. That's as much as you're going to get."

Mr Carney said he wanted to "really dampen down" the view that cheap foreign labour had stopped increases in productivity.

He said: "The facts of this recovery have been there has been a huge growth in employment, one of the strongest job markets in the world, and we have seen a big increase in the willingness of the British people, British nationals, to work.

"In the course of the last two years, the number of older workers - people in their 50s and 60s - who stayed in the labour market has been more than 300,000 more than we would have seen in previous times.

"In addition, people want to work more hours. That's another 200,000 to 300,000 more workers, effectively more workers.

"Compare that to the increase in net migration - the increase in the number of people coming to these shores - the first two numbers I just gave you total up to more than 500,000, the increase in net migration over that same period in the last two years is 50,000.

"So the real story here is that British people have wanted to work more and what's happened with the economy - and now I'll get to productivity - is that jobs have been created, people are getting those jobs, now that spare capacity is being used up - as you saw yesterday the unemployment rate is down to 5.5%, we've created 200,000 jobs in the last three months alone - so that spare capacity is being used up and now for the economy to move forward it's going to be a story of productivity."

Mr Carney said foreign workers tend to start in jobs for which they are over-qualified and then over time move up the skill chain to secure work more suited to their skills.

He said: "They contribute to that increase in productivity. That is something we see across the economy."

Asked whether David Cameron would consider bringing the proposed referendum forward, the Prime Minister's official spokesman said: "On the timing of the referendum, there is no change in the position."

The spokesman pointed out that Mr Cameron has repeatedly stated he would be happy to hold the referendum before the deadline of the end of 2017, but only if the renegotiation of Britain's EU membership has been completed.

"The referendum will follow the renegotiation, so we have to get the renegotiation," said the spokesman. "The only priority here is about getting the right deal for Britain."

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